Shutdown's cost are sure to be steep

Oct. 13, 2013 - 06:00AM
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NTEU President Colleen Kelley said the lack of IRS enforcement could encourage tax cheats. (Colin Kelly/Staff)

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The cost of the partial government shutdown is climbing into the billions of dollars, both to the government and in the ripple effects throughout the economy, experts say.

Lost pay and benefits from furloughing almost 800,000 federal employees amounts to an economic impact of $1.6 billion per week, according to an analysis by IHS Global Insight, a consulting firm. While the estimated number of furloughed workers dropped last week by about half, the weekly cost still runs into hundreds of millions of dollars.

The repercussions don’t stop there.

The National Park Service has lost millions of dollars worth of admissions and other fees, according to survey findings released last week. Based on receipts at this time last year, the lost revenue so far amounts to more than $3 million a week, according to the Coalition of National Park Service Retirees.

Much of the IRS is shuttered as well. While tax collections are continuing, the IRS is not sending out levies or liens. Colleen Kelley, president of the National Treasury Employees Union, told Federal Times that the lack of enforcement could embolden tax cheats. In addition, the agency is sticking with an Oct. 15 deadline deadlinefor some 12 million taxpayers who requested an extension. The bulk of those have yet to file. Because toll-free help lines and taxpayer assistance centers are closed, “there is definitely a cost to not having employees available to answer questions in terms of impact on voluntary compliance,” she said.

There are other effects that may be impossible to measure. For example, contractors stung by the shutdown may drop out of the federal market, lessening competition, said Philip Joyce, a professor of public policy at the University of Maryland.

Employee recruitment could also be hurt. Competition with the private sector for talented information technology professionals is already stiff, said one agency chief information officer who spoke on condition that he not be identified. Now, he said, “it’s a lot harder to make the case for someone to come in and spend time in government.”

Throughout the government, shutdown preparations drained vast amounts of staff resources. At the Defense Department, planning efforts consumed “probably thousands of hours in employee time better spent on supporting national security,” Comptroller Robert Hale said late month.

For Pat Niehaus, an Air Force human resources official who is also president of the Federal Managers Association, shutdown issues have taken “about 100 percent” of her working hours.

“This is about all I’ve done for the last three or four weeks,” said Niehaus, who said she was speaking in her capacity as FMA president.

The agency closings that began Oct. 1 mark the biggest disruption to government services since the two shutdowns in late 1995 and early 1996 that idled about 800,000 federal employees at their peak. The Office of Management and Budget estimated those shutdowns cost about $1.4 billion, mainly for providing back pay to furloughed employees.

Other direct and indirect costs associated with the current shutdown, according to experts:

■ A high use of contract stop-work orders and terminations for convenience, according to Rob Burton, a government contracts attorney at Venable who previously served as deputy administrator in OMB’s Office of Federal Procurement Policy. Although stop-work orders give agencies increased flexibility, it hits small businesses particularly hard because of their narrower cash-flow margins, he added.

■ The closure of Veterans Affairs Department regional offices and the furloughing of 7,000 employees because the shutdown threatens the VA’s high-profile and costly campaign to cut the backlog of veterans disability claims. “All the effort that they’ve made is going to be erased very quickly,” said Thomas White, a retired Army lawyer who runs the John Marshal Law School Veterans Legal Support Center and Clinic in Chicago. Every day the shutdown continues, White said, 1,400 fewer claims are being processed. “It’s just going to further the frustration that veterans already feel.” ■